National Republican., 1887-08-19

'pE w 'lNitl hN'tVb bue pia'h ihpS' 'O'"''"
OF the law or to let the representatives OF
the people assemble and provide new remo-
dies, hat we present this review.
On the 25th Of February, 1862, the first
law authorizing the issue Of bonds was
passed by Congress. The nation was en-
gagged in the most gigantic war of modern
timts, It's credit was at low ebb with all
foreign nations, and IL became necessary to
raise money by Issuance Of notes and by the
system OF loans known as the bond system.
To inspire confidence, and thus secure
money on the best possible terms, the act
authorizing the loans contained a section
providing sinking fund, by which fund
was to be raised sufficient to retire the
bonds, and this section set apart a portion
Of the revenues OF the government spe-
cI6cally dedicated to that purpose, and
which could be used for no other.
The fifth section OF the act entitled "An
act to authorize the issue of United States
notes and for the funding and floating debt
Of the United States" reads as follows;
That all duties on imported goods shall be
pnid.in coin, or In notes payable on demand
heretofore authorized to be issued, and by law
receivable in payment of public dues, and tho
coin so paid shall be set apart as Especial fund,
and shall be applied as follows
First. To the payment in coin of the interest
on the bonds of the Uulted States
Second. To the purchase or payment OF one
per centUm of the entire debt of the United
states, to be made within each fiscal year aftcr
the LIST day of July, 1862 which IS to be set
apart ms u sinking fund, and the interest OF
which shall in like manner be applied to the
purchase or payment Of the public debt as the
Secretary of the Treasury shall from time to
time direct-(United statcs Statutes at Large,
vol l2, page 3i6l.
Under this law the legal tender notes.
commonly known as greenbacks, were
issued; as well as the first bonds. Various
other acts authorizing the issue OF bonds
followed until the bonded debt assumed
enormous proportions, but this "sinklng
fund" clause of the law Of 1862 applied TO
every bond issued.
The close OF the war saw not only the
currency debt, that Is the greenback or
legal tender notes, but also the bonded
debt still at heavy discount, and an effort
was made In the fortieth Congress to enact
law to strengthen the public credit, but
after exhaustive debate, the factious opposl-
tion Of some members caused this effort to
fail. The forty-ilrst Congress was called
to meet early in March, 1869, and 1t passed
an act approved on the 18th OF March,
1869, entitled'"An act to strengthen the
public credit,n from which the following
is an extract:
n,,t nT I, nt,t
not already due shall be redeemed or paid be-
fore maturity unless at such time United States
notes are convertible into coin at the option OF
the holder, or unless at such time bonds of tho
United States bearing q lower rate OF interest
than the bonds to be redeemed can be sold at
par in coir. United States Statutes at Large,
vol, TO- p. ~
The first clause Of this law reads as fol-
lows:
"The faith Of The United States is sol
o,nniy 1lcdged TO the payment in coin or is
eqt'itaient Of all the obligations Of the United
States not bearing interest, k,l0Wn as Uuited
States notes, and of all the inter, st-bearing
obligations of the United States, except
where the la,c authorizing the issue Of any
suoh obligation has expressly provided that
the same maybe paid in lagftA money Or
other currency than gold and Siicer."
But very few OF the bonds then issued
came under the exceptions; that is, were
expressly" declared to be payable sin
lawful money or other currency than gold
| and silyer.n Thus the law OF 1869 offered
| In Its first clause to the creditors to change
the obligation In their favor by agreeing
N N nr ic oil ha
bonds, and required them, In consideration
Of this, to agree that, wheu greenbacks were
at par with gold and the credit of the
United States had advanced so 1t could
borrow money ut u lower rate of interest
than 1t was then paying, all the bonds
should be redeemable at the option OF the
government.
This was an offer absolutely fair to both
| parties. The creditors were guaranteed
"coinn-the money Of the word-for thel
| obligations not previously payable In C liu
hy direct contract, and the United STATE.
had the privilege of securing a lower rate
of interest if its credit appreciated so tina,
| its varied obligations, Understanding and
otherwise, reached par. The same Con.
gress, July II, 1870, passed an act IN pur.
suance OF the law OF 1869 authorizing the
Secretary Of the Treasury to refund the
| 6ebt whenever he could do SO at Lower
rate of interest. 1t Is found in United
States Statutes at Large, volume 16, page
272.
This law must OF course, be considered
with the other prev ously passed aud then
on the statute books. The bonds whiot
the Secretary Of the Treasury was author
lied to issue were expressly dedicated h
the purpose of retiring the bonds then out
standing. The new bonds could be ex
changed for the old dollar for dollar, o.
could be sold for coin at par, but ever,
dollar Of that coin was expressly set apar
to redeem the old bonds.
The Secretary had to wait some year
before the credit OF the United States ep
preciated, 80 that he could use his low
rate bonds for the redemption OF the high
rate oEes, or sell them ut par for coin. A
few Of the per cent. bonds, the highes
rate allowed, were issued In III aud u
to redeem compound interest notes, coli
certificates, and ten forties; but most o
them were not issued until VI, '75, '76
The first of the four-and.a-halfs were issuet
in ~, and few OF the fours in '7S, tn
most of them being used In 1879.
1t lisa well-settled and undisputed prin-
cille Of law that all laws bearln
upon the subject become part of an,
contract, so that the sinking fund clause o
the act OF 1862 and the redemption claus
Of the act of 1869, both upon the statut
books at the time OF the issuance OF thes
bonds and bearing upon the subject, becam
part Of The c0ntraci betUeen hc Unite
States and the purchasers and hOlderS of il
bonds. Aud It ia also wei! settled that
law cannot be repealed by implication; tina
there must be direct words to effect the RI